Doctoral Scholar, Indian Institute of Management Ahmedabad, India
The paper examines multi-stakeholder governance in a loss sharing environment. Drawing on consensus and governance literature, I undertake a qualitative study to bring out the difficulty in achieving consensus in a multi-stakeholder domain especially when the stakeholders differ in their perspectives on the valuation of a firm. Identifying the positions occupied by various stakeholders in the negotiation towards consensus building, I identify which of the actors in the multi-stakeholder governance process will have the greatest incentives to break down the barriers and the process adopted to bring about the resolution. The context is the Insolvency and Bankruptcy Code (IBC) in India that shifts the management control in financially distressed firms to its financial creditors for a defined period with a mandate to revive, restructure, and sell the firm as a “going concern”. If the sale does not occur, the firm is sent for liquidation leading to losses for all stakeholders. Despite the criticality of time, the consensus remains elusive in many cases as stakeholders try to optimize their respective organization positions to reduce the loss. The paper offers a nuanced perspective on the consensus formation process and the role of governance in the multistakeholder environment.